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Federal Reserve Bank
of Dallas

l l★K

DALLAS, TEXAS
75265-5906

May 9, 2001
Notice 01-41

TO: The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District

SUBJECT
Prohibition Against Use of Interstate Branches
Primarily for Deposit Production
DETAILS
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have issued a proposal to
amend the uniform regulations implementing section 109 of the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994. The proposal would execute the amendment to section
109 in the Gramm-Leach-Bliley Act of 1999. Section 109
•

prohibits any bank from establishing or acquiring a branch or branches outside of
its home state under the Interstate Act primarily for deposit production, and

•

provides guidelines for determining whether such bank is reasonably helping to
meet the credit needs of the communities served by these branches.

Section 106 of the Gramm-Leach-Bliley Act of 1999 expanded the coverage of
section 109 of the Interstate Act to include any branch of a bank controlled by an out-of-state
bank holding company. This proposal amends the regulatory prohibition against branches being
used as deposit production offices to include any bank or branch of a bank controlled by an outof-state bank holding company, including a bank consisting only of a main office.
The Board must receive comments by June 8, 2001. Please address comments to
Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

-2-

and Constitution Avenue, N.W., Washington, DC 20551. Also, you may mail comments electronically to regs.comments@federalreserve.gov. All comments should refer to Docket No.
R-1099.
ATTACHMENT
A copy of the Board’s notice as it appears on pages 18411–16, Vol. 66, No. 68 of the
Federal Register dated April 9, 2001, is attached.
MORE INFORMATION
For more information, please contact Eugene Coy, Banking Supervision Department,
(214) 922-6201. For additional copies of this Bank’s notice, contact the Public Affairs Department at (214) 922-5254 or access District Notices on our web site at
http://www.dallasfed.org/banking/notices/index.html.

18411

Proposed Rules

Federal Register
Vol. 66, No. 68
Monday, April 9, 2001

This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 25
[Docket No. 01–06]
RIN 1557–AB95

FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Regulation H; Docket No. R–1099]

FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 369
RIN 3064–AC36

Prohibition Against Use of Interstate
Branches Primarily for Deposit
Production
AGENCIES: Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
SUMMARY: The OCC, the Board, and the
FDIC (collectively, the ‘‘Agencies’’)
propose to amend the uniform
regulations implementing section 109 of
the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994
(Interstate Act) to effectuate the
amendment to section 109 contained in
the Gramm-Leach-Bliley Act of 1999.
Section 109 prohibits any bank from
establishing or acquiring a branch or
branches outside of its home State
under the Interstate Act primarily for
the purpose of deposit production, and
provides guidelines for determining
whether such bank is reasonably
helping to meet the credit needs of the
communities served by these branches.
Section 106 of the Gramm-Leach-Bliley
Act of 1999 expanded the coverage of
section 109 of the Interstate Act to
include any branch of a bank controlled

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by an out-of-State bank holding
company. This proposal amends the
regulatory prohibition against branches
being used as deposit production offices
to include any bank or branch of a bank
controlled by an out-of-State bank
holding company, including a bank
consisting only of a main office.
DATES: Comments must be received on
or before June 8, 2001.
ADDRESSES: Comments should be
directed to:
OCC: Public Information Room, Office
of the Comptroller of the Currency, 250
E Street, SW., Mailstop 1–5,
Washington, DC 20219, Attention:
Docket No. 01–06. Comments will be
available for public inspection and
photocopying at the same location. You
can make an appointment to inspect the
comments by calling (202) 874–5043. In
addition, you may send comments by
fax to (202) 874–4448, or by electronic
mail to regs.comments@occ.treas.gov.
Board: Jennifer J. Johnson, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
DC 20551 or mailed electronically to
regs.comments@federalreserve.gov.
Comments should refer to docket
number R–1099. Comments addressed
to Ms. Johnson may also be delivered to
the Board’s mail room between 8:45
a.m. and 5:15 p.m., and to the security
control room outside of those hours.
Both the mail room and control room
are accessible from the courtyard
entrance on 20th Street between
Constitution Avenue and C Street, NW.,
Washington, DC. Comments may be
inspected in room MP–500 between 9
a.m. and 5 p.m., except as provided in
§ 261.14 of the Board’s Rules Regarding
Availability of Information, 12 CFR
261.14.
FDIC: Send written comments to
Robert E. Feldman, Executive Secretary,
Attention: Comments/OES, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
Comments may be hand delivered to the
guard station at the rear of the 550 17th
Street Building (located on F Street), on
business days between 7 a.m. and 5 p.m.
FAX number: (202) 898–3838.
Comments may be inspected and
photocopied in the FDIC Public
Information Center, Room 100, 801 17th
Street, NW., Washington, DC, between 9
a.m. and 4:30 p.m. on business days.
Comments may be submitted to the

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FDIC electronically over the Internet at
www.fdic.gov. Further information
concerning this option may be found at
‘‘FDIC’s New Electronic Public
Comment Site.’’ Comments also may be
submitted electronically to
comments@fdic.gov. We may post
comments at the FDIC’s web site.
FOR FURTHER INFORMATION CONTACT:
OCC: Karen Tucker, National Bank
Examiner, Community and Consumer
Policy (202) 874–4428; Kathryn Ray,
Senior Attorney, Community and
Consumer Law Division (202) 874–5750;
Patrick T. Tierney, Attorney, Legislative
and Regulatory Activities Division (202)
874–5090; or with respect to foreign
banks, Maureen Cooney, Senior
Attorney, Legislative and Regulatory
Activities Division (202) 874–5090.
Board: Michael J. O’Rourke, Counsel,
Legal Division (202) 452–3288; Shawn
McNulty, Assistant Director, Division of
Consumer and Community Affairs (202)
452–3946; or with respect to foreign
banks, Sandra L. Richardson, Assistant
General Counsel, Legal Division (202)
452–6406.
FDIC: Louise Kotoshirodo Kramer,
Review Examiner, Division of
Compliance and Consumer Affairs,
(202) 942–3599; or Marc J. Goldstrom,
Counsel, Regulations and Legislation
Section (202) 898–8807.
SUPPLEMENTARY INFORMATION: The
contents of this preamble are listed in
the following outline:
I. Background
II. Overview of the Proposed Rule
A. Bank Locations Subject to Section 109
As Amended
1. Coverage of Banks’ Main Offices
2. Coverage of Interstate and Intrastate
Branches
B. Multi-Tier Bank Holding Companies
C. Definition of ‘‘Home State’’ for a Bank
Holding Company
D. Foreign Banks and Branches
E. Impact of the Rule
F. Request for Comment
G. Plain Language
III. FDIC’s Electronic Public Comment Site
IV. Regulatory Analysis
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. OCC Executive Order 12866
Determination
D. OCC Unfunded Mandates Reform Act of
1995 Determination
E. The Treasury and General Government
Appropriations Act, 1999—Assessment
of Impact of Federal Regulation on
Families

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Federal Register / Vol. 66, No. 68 / Monday, April 9, 2001 / Proposed Rules

I. Background
provides
The Interstate
expanded authority for a domestic or
foreign bank to establish or acquire a
branch in a State other than the bank’s
home State. Section 109 of the Interstate
Act requires the Agencies to prescribe
uniform rules that prohibit the use of
the Act’s interstate branching authority
primarily for the purpose of deposit
production.2 Congress enacted section
109 to ensure that the new interstate
branching authority provided by the
Interstate Act would not result in the
taking of deposits from a community
without banks reasonably helping to
meet the credit needs of that
community. See H.R. Conf. Rep. No.
103–651, at 62 (1994).
As required by section 109, the
agencies issued a joint final rule
implementing section 109. 62 FR 47728
(September 10, 1997). This rule
provides that, beginning no earlier than
one year after a bank establishes or
acquires a covered interstate branch, the
appropriate agency will determine
whether the bank satisfies a loan-todeposit ratio screen that has been
established by section 109.
The loan-to-deposit ratio screen
compares a bank’s loan-to-deposit ratio
within the State where the bank’s
covered interstate branches are located
(statewide loan-to-deposit ratio) with
the loan-to-deposit ratio of all banks
chartered or headquartered in that State
(host State loan-to-deposit ratio).3 If the
bank’s statewide loan-to-deposit ratio is
at least 50 percent of the host State loanto-deposit ratio, no further analysis is
required. If, however, the appropriate
agency determines that the bank’s
statewide loan-to-deposit ratio is less
than 50 percent of the host State loanto-deposit ratio, then the agency must
perform a credit needs determination. A
credit needs determination would also
be performed if the appropriate agency
determines that reasonably available
data does not exist that permits the
agency to determine the bank’s
statewide loan-to-deposit ratio. Under
the credit needs determination, the
appropriate agency reviews the
activities of the bank, such as its lending
activity and its performance under the
Community Reinvestment Act (CRA),
and determines whether the bank is
reasonably helping to meet the credit
needs of the communities served by the
bank in the host State.
Act 1

1 Pub.

L. 103–328, 108 Stat. 2338.
U.S.C. 1835a.
3 Host State loan-to-deposit ratios, based on
reasonably available data, are jointly published by
the agencies every year.

A bank that fails the loan-to-deposit
ratio screen and that receives a
determination that it is not reasonably
helping to meet the credit needs of the
communities served by the bank’s
interstate branches could be subject to
sanctions under section 109.
Section 106 of the Gramm-LeachBliley Act of 1999 (GLBA), Pub. L. 106–
102, 113 Stat. 1338 (November 12,
1999), amends section 109 by changing
the definition of an interstate branch to
include any branch of a bank controlled
by an out-of-State bank holding
company (as defined in section 2(o)(7)
of the Bank Holding Company Act of
1956 (BHC Act)). Any branch of a bank
controlled by an out-of-State bank
holding company is an ‘‘interstate
branch’’ for purposes of section 109.
The agencies are proposing to conform
their uniform regulations made to this
amendment by the GLBA.
II. Overview of the Proposed Rule
As discussed in the Background
section, section 109 prohibits the use of
the interstate banking and branching
authority granted by the Interstate Act to
engage in interstate branching primarily
for the purpose of deposit production.
Prior to the GLBA, this prohibition
applied to any bank that established or
acquired, directly or indirectly, a branch
under the authority of the Interstate Act
or amendments to any other provision
of law made by the Interstate Act. In
accordance with the amendments to
section 109 adopted by the GLBA, the
proposed rule broadens this prohibition
to apply not only to branches
established pursuant to the Interstate
Act, but also to any bank or branch of
a bank controlled by an out-of-State
bank holding company. Thus, the
definition of the term ‘‘covered
interstate branch’’ would be revised to
include any bank or branch of a bank
controlled by an out-of-State bank
holding company. We further propose to
make conforming changes to our
regulations 4 to revise the definition of
‘‘host state’’ and to clarify that the loanto-deposit ratio screen will be applied to
a bank, or branch of a bank, controlled
by an out-of-State bank holding
company in the same manner as the
screen is applied to a covered interstate
branch under the current rule.
A. Bank Locations Subject to Section
109 as Amended
Prior to the GLBA, section 109’s
deposit production office prohibition
applied only to an interstate branch in

2 12

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4 See 12 CFR 25.62(e) and 25.63(a) (OCC); 12 CFR
208.7(b)(4) and 208.7(c)(1) (Federal Reserve); 12
CFR 369.2(d) and 369.3(a)(FDIC).

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a host State that is acquired or
established by an out-of-State bank
pursuant to the Interstate Act or any
amendment made by the Interstate Act.
As amended, it now also applies to any
branch of a bank controlled by an outof-State bank holding company. The
legislative history of this amendment
indicates that Congress intended that
this amendment would expand the
scope of section 109 to cover any bank
or branch of a bank controlled by an
out-of-State bank holding company, as
discussed below.
1. Coverage of Banks’ Main Offices
Coverage under the proposed rule
extends to banks controlled by out-ofState bank holding companies,
including banks consisting only of a
main office. The amendment to section
109 includes banks consisting of only a
main office because the purpose of the
legislation is to prevent out-of-State
bank holding companies from taking
deposits out of a community without
helping to meet the credit needs of that
community. See 145 Cong. Rec. H11529
(daily ed. Nov. 4, 1999); 145 Cong. Rec.
H5217 (daily ed. July 1, 1999); 144
Cong. Rec. H3133 (daily ed. May 13,
1998). The purpose of the legislation
would be negated if banks consisting
only of a main office were excluded. For
example, out-of-State bank holding
companies could take deposits from a
host State simply by establishing
separately chartered, single-office banks
in a host State. Therefore, we have
proposed that banks consisting only of
a main office and controlled by an outof-State bank holding company be
subject to the joint rule.
2. Coverage of Interstate and Intrastate
Branches
The amendment to section 109
expands the scope of the rule to include
all branches of a bank that is controlled
by an out-of-State bank holding
company. Indeed, Congress intended to
apply the section 109 rule to ‘‘all
branches of a bank owned by an out-ofState holding company,’’ not just to
previously exempt branches owned by
such banks. See H.R. Rep. No. 106–74,
pt. 1 at 128 (1999) (emphasis added).
Thus, the proposed rule applies to all
branches of a bank when the bank and
its controlling bank holding company
have different home states.
B. Multi-Tier Bank Holding Companies
Section 106 of the GLBA expands the
definition of interstate branch to any
branch of a bank controlled by an outof-State bank holding company
incorporating by reference the BHC Act
definition of an ‘‘out-of-State bank

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Federal Register / Vol. 66, No. 68 / Monday, April 9, 2001 / Proposed Rules
holding company.’’ 12 U.S.C. 1841(o)(7).
We will use the BHC Act definition of
control to determine the controlling
bank holding company. This is the top
tier bank holding company in a multitier bank holding company structure.
C. Definition of ‘‘Home State’’ for a
Bank Holding Company
The BHC Act defines ‘‘home State’’
with respect to a bank holding company
as the State where total deposits of all
banking subsidiaries are the greatest as
of the later of July 1, 1966 or the date
on which a company becomes a bank
holding company. 12 U.S.C. 1841(o)(4).
To determine the home State of a bank
holding company, the agencies will
determine, from sources available at the
agencies, the State where the total
deposits of all the banking subsidiaries
were the greatest as of the later of July
1, 1966 or the date the bank holding
company was formed. We recognize
that, in certain cases, the State where
the total deposits of all of a bank
holding company’s subsidiary banks
were greatest on July 1, 1966 or at the
date of formation of the bank holding
company may not be the same State as
where the bank holding company
subsidiary banks hold the greatest
amount of deposits now or at a future
date. However, the amendment to
section 109 made by the GLBA adopts
the BHC Act definition of ‘‘out-of-State
bank holding company,’’ and the BHC
Act definition of ‘‘home State’’ is
incorporated into that definition.
D. Foreign Banks and Branches
Section 106 of the GLBA also
necessitates an amendment to the
definition of ‘‘home state’’ for foreign
banks with banking operations in the
United States. Under U.S. banking law
and regulation, foreign banks may be
treated as banking institutions, bank
holding companies, or both, depending
on the nature of their operations in the
United States. For purposes of
determining whether a U.S. branch of a
foreign bank is a covered interstate
branch, a foreign bank’s home state is
determined under section 5 of the
International Banking Act of 1978 (12
U.S.C. 3103) and section 211.22 of the
Federal Reserve’s Regulation K (12 CFR
211.22). For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, a foreign bank’s home
state is determined in accordance with
12 U.S.C. 1841(o)(4) as discussed above
in section II C. of this preamble
regarding U.S. bank holding companies.
A foreign bank may have different home
states with respect to direct offices and
subsidiary banks.

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E. Impact of the Rule
The proposed rule is unlikely to have
any impact on the vast majority of
banks. Consistent with section 109
when it was first enacted, the proposed
rule does not impose any new record
keeping requirements on affected
institutions. We use existing data to
determine the loan-to-deposit ratio
screen.
Moreover, there is no additional
burden imposed as a result of the credit
needs determination. In order to make
that determination, the appropriate
agency will review the activities of the
bank, such as its lending activity and its
performance under the CRA,5 and
evaluate whether the bank is reasonably
helping to meet the credit needs of the
communities served by the bank in the
host State.
The only circumstance in which the
proposed rule would impose a burden
on banks is if the bank fails both the
loan-to-deposit ratio screen and the
credit needs determination.
Accordingly, while the statutory
amendment and this proposed rule
extend the scope of the DPO rule, this
extended scope is unlikely to affect
most institutions.
F. Request for Comment
We invite public comment on all
aspects of the proposed rule. In
particular, we request comment on the
coverage of main offices and interstate
and intrastate branches, the treatment of
multi-tier bank holding companies, the
definition of ‘‘home state’’ for an out-ofstate bank holding company, and the
treatment of foreign banks and branches.
Each of these issues is discussed
elsewhere in this preamble, and we
5 Some entities that could be subject to section
109, including certain special purpose banks and
uninsured branches of foreign banks, are not
evaluated for CRA performance by the Agencies.
For such entities, we will continue to use the CRA
regulations as guidelines in making a credit needs
determination. The CRA regulations provide only
guidance to assess whether activities identified by
these institutions help to meet the community’s
credit needs, and do not obligate the institutions to
have a record of performance under the CRA or
require that the institutions pass any performance
tests in the CRA regulations. We also will continue
to give substantial weight to the factor relating to
specialized activities in making a credit needs
determination for institutions not evaluated under
the CRA. For example, most branches of foreign
banks derive substantially all their deposits from
wholesale deposit markets, which are generally
national or international in scope. This approach is
consistent with section 109’s overall purpose of
preventing banks from using the Interstate Act to
establish branches primarily to gather deposits in
their host state without reasonably helping to meet
the credit needs of the communities served by the
bank in the host state. See Prohibition Against use
of Interstate Branches Primarily for Deposit
Production, 62 FR 47728, 47732–33 (September 10,
1997) (codified at 12 CFR parts 25, 208, 211, 369).

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18413

invite comment on the views expressed
therein.
The Agencies also seek comments on
the impact of this proposal on
community banks. Community banks
operate with more limited resources
than larger institutions and may present
a different risk profile. We believe that
this rule will not have a significant
impact on community banks.
Nevertheless we specifically request
comment on the impact of the proposal
on community banks’ current resources
and available personnel with the
requisite expertise, and whether the
goals of the proposed regulation could
be achieved, for community banks,
through an alternative approach.
G. Plain Language
Section 722 of the GLBA (12 U.S.C.
4809) requires each federal banking
agency to use plain language in all
proposed and final rules published after
January 1, 2000. To this end, we invite
your comments on how to make the
changes proposed by this rulemaking
easier to understand.
III. FDIC’s Electronic Public Comment
Site
The FDIC has included a page on its
web site to facilitate the submission of
electronic comments in response to this
general solicitation (the EPC site). The
EPC site provides an alternative to the
written letter and may be a more
convenient way for you to submit your
comments. Commenting through the
EPC site helps the FDIC more accurately
and efficiently analyze comments
submitted electronically. If you submit
your comments through the EPC site
your comments will receive the same
consideration that they would receive if
submitted in hard copy to the FDIC’s
street address. Information provided
through the EPC site will be used by the
FDIC only to assist in its analysis of the
proposed regulation. The FDIC will not
use an individual’s name or any other
personal identifier of an individual to
retrieve records or information
submitted through the EPC site. Like
comments submitted in hard copy to the
FDIC’s street address, EPC site
comments will be made available in
their entirety (including the
commenter’s name and address if the
commenter chooses to provide them) for
public inspection.
The EPC site will be available on the
FDIC’s home page at http://
www.fdic.gov. You will be able to
provide comments directly on any of the
sections of the proposed regulation. You
will also be able to view the regulation
and Supplementary Information
sections that relate to your comments

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Federal Register / Vol. 66, No. 68 / Monday, April 9, 2001 / Proposed Rules

directly on the site. The FDIC
encourages you to provide written
comments in the spaces provided.
Written comments enable the FDIC to
thoughtfully consider possible changes
to the proposed regulation.
The FDIC is also interested in your
feedback on the EPC site. We have
provided a space for you to comment on
the site itself. Answers to this question
will help the FDIC evaluate the EPC site
for use in future rulemaking.
At the conclusion of the EPC site, you
will have an opportunity to provide us
with your name, indicate whether you
are an individual, bank, trade
association, or government agency, and
provide the name of the organization
you represent, if applicable. Whether
you choose to respond to these
questions is entirely up to you. Any
responses received may help the FDIC
to better understand the public
comments it receives.
IV. Regulatory Analysis
A. Paperwork Reduction Act
The agencies have determined that
this proposal does not involve a
collection of information pursuant to
the provisions of the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.
B. Regulatory Flexibility Act
OCC: Pursuant to section 605(b) of the
Regulatory Flexibility Act, the OCC
certifies that this proposal will not have
a significant economic impact on a
substantial number of small entities.
Section 109 requires that the agencies
use only available information to
conduct their analyses. Consistent with
this requirement, this proposal does not
impose any additional paperwork or
regulatory reporting requirements.
Board: Pursuant to section 605(b) of
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.), the Board certifies that the
proposed rule will not have a significant
economic impact on a substantial
number of small entities. Review for
compliance with section 109 is
conducted at the same time that the
Community Reinvestment Act review is
performed. Consistent with the
requirement that the agencies use only
available information to conduct a
section 109 review, the proposed rule
does not impose any additional
regulatory burden on banks beyond
what is required by statute. The burden
to conduct the review and use only
available data is on the banking
regulatory agencies. Thus, the proposed
rule will not have a significant
economic impact on a substantial
number of small entities.
FDIC: Pursuant to section 605(b) of
the Regulatory Flexibility Act (5 U.S.C.

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601 et seq.), the FDIC certifies that the
proposed rule will not have a significant
economic impact on a substantial
number of small entities. The rule
would extend coverage of section 109 to
some additional institutions, including
small entities. However, based on
previous examination experience, we
estimate that one or fewer institutions
per year will experience any cost in
connection with complying with the
rule. Thus, the proposed rule will not
have a significant economic impact on
a substantial number of small entities.
C. OCC Executive Order 12866
Determination
The OCC has determined that its
portion of the proposed rulemaking is
not a significant regulatory action under
Executive Order 12866.
D. OCC Unfunded Mandates Reform Act
of 1995 Determination
Section 202 of the Unfunded
Mandates Reform Act of 1995, Pub. L.
104–4 (Unfunded Mandates Act)
requires that an agency prepare a
budgetary impact statement before
promulgating a rule that includes a
Federal mandate that may result in
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year. If a budgetary impact
statement is required, section 205 of the
Unfunded Mandates Act also requires
an agency to identify and consider a
reasonable number of regulatory
alternatives before promulgating a rule.
The OCC has determined that this final
rule will not result in expenditures by
State, local, and tribal governments, or
by the private sector, of $100 million or
more. Accordingly, the OCC has not
prepared a budgetary impact statement
or specifically addressed the regulatory
alternatives considered.
E. The Treasury and General
Government Appropriations Act, 1999—
Assessment of Impact of Federal
Regulation on Families
The FDIC has determined that this
proposed rule will not affect family
well-being within the meaning of
section 654 of the Treasury and General
Government Appropriations Act, 1999,
Pub. L. 105–277, 112 Stat. 2681.
List of Subjects
12 CFR Part 25
Community development, Credit,
Investments, National banks, Reporting
and recordkeeping requirements.
12 CFR Part 208
Accounting, Agriculture, Banks,
banking, Confidential business

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information, Crime, Currency, Federal
Reserve System, Mortgages, Reporting
and recordkeeping requirements,
Securities.
12 CFR Part 369
Banks, banking, Community
development.
Department of the Treasury
Office of the Comptroller of the
Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the joint
preamble, the Office of the Comptroller
of the Currency proposes to amend part
25 of chapter I of title 12 of the Code
of Federal Regulations as follows:
PART 25—COMMUNITY
REINVESTMENT ACT AND
INTERSTATE DEPOSIT PRODUCTION
REGULATIONS
1. The authority citation for part 25
continues to read as follows:
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1814, 1816, 1828(c),
1835a, 2901 through 2907, and 3101 through
3111.

2. Amend § 25.62 by:
A. Revising paragraphs (b), (d) and (e);
B. Redesignating paragraphs (g) and
(h) as paragraphs (h) and (i)
respectively; and
C. Adding a new paragraph (g) to read
as follows:
§ 25.62

Definitions.

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(b) Covered interstate branch means:
(1) Any branch of a national bank, and
any Federal branch of a foreign bank,
that:
(i) Is established or acquired outside
the bank’s home state pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(ii) Could not have been established
or acquired outside of the bank’s home
state but for the establishment or
acquisition of a branch described in
paragraph (b)(1)(i) of this section; or
(2) Any bank or branch of a bank
controlled by an out-of-state bank
holding company.
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(d) Home state means:
(1) With respect to a state bank, the
state that chartered the bank,
(2) With respect to a national bank,
the state in which the main office of the
bank is located;
(3) With respect to a bank holding
company, the state in which the total

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Federal Register / Vol. 66, No. 68 / Monday, April 9, 2001 / Proposed Rules
deposits of all banking subsidiaries of
such company are the largest on the
later of:
(i) July 1, 1966; or
(ii) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining
whether a U.S. branch of a foreign bank
is a covered interstate branch, the home
state of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 211.22; and
(ii) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the state in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(A) July 1, 1966; or
(B) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.
(e) Host state means a state in which
a covered interstate branch is
established or acquired.
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(g) Out-of-state bank holding
company means, with respect to any
state, a bank holding company whose
home state is another state.
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3. In § 25.63, paragraph (a) is revised
to read as follows:
§ 25.63

Loan-to-deposit ratio screen

(a) Application of screen. Beginning
no earlier than one year after a covered
interstate branch is acquired or
established, the OCC will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host State loan-to-deposit
ratio.
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Dated: March 29, 2001.
John D. Hawke, Jr.,
Comptroller of the Currency.

Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the joint
preamble, the Board of Governors of the
Federal Reserve System proposes to
amend part 208 of chapter II of title 12
of the Code of Federal Regulations as
follows:
PART 208—MEMBERSHIP OF STATE
BANKING INSITUTIONS IN THE
FEDERAL RESERVE SYSTEM
(REGULATION H)
1. The authority citation for part 208
continues to read as follows:

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Authority: 12 U.S.C. 24, 36, 92a, 93a,
248(a), 248(c), 321–338a, 371d, 461, 481–486,
601, 611, 1814, 1816, 1818, 1820(d)(9),
1823(j), 1828(o), 1831, 1831o, 1831p–1,
1831r–1, 1831w, 1835a, 1882, 2901–2907,
3105, 3310, 3331–3351, and 3906–3909; 15
U.S.C. 78b, 781(b), 781(g), 781(i), 78o–4(c)(5),
78q, 78q–1, and 78w; 31 U.S.C. 5318, 42
U.S.C. 4012a, 4104a, 4104b, 4106 and 4128.

2. In § 208.7, redesignate existing
paragraphs (b)(6) and (b)(7) as (b)(7) and
(b)(8), respectively, revise paragraphs
(b)(2), (b)(3), (b)(4) and (c)(1), and add
new paragraph (b)(6) to read as follows:
§ 208.7 Prohibition against use of
interstate branches primarily for deposit
production.

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(b) * * *
(2) Covered interstate branch means:
(i) Any branch of a state member
bank, and any uninsured branch of a
foreign bank licensed by a state, that:
(A) Is established or acquired outside
the bank’s home state pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(B) Could not have been established
or acquired outside of the bank’s home
state but for the establishment or
acquisition of a branch described in
paragraph (b)(2)(i) of this section; or
(ii) Any bank or branch of a bank
controlled by an out-of-state bank
holding company.
(3) Home state means:
(i) With respect to a state bank, the
state that chartered the bank;
(ii) With respect to a national bank,
the state in which the main office of the
bank is located;
(iii) With respect to a bank holding
company, the state in which the total
deposits of all banking subsidiaries of
such company are the largest on the
later of:
(A) July 1, 1966; or
(B) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act.
(iv) With respect to a foreign bank:
(A) For purposes of determining
whether a U.S. branch of a foreign bank
is a covered interstate branch, the home
state of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 211.22; and
(B) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the state in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(1) July 1, 1966; or
(2) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.

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(4) Host state means a state in which
a covered interstate branch is
established or acquired.
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(6) Out-of-state bank holding
company means, with respect to any
state, a bank holding company whose
home state is another state.
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(c)(1) Application of screen.
Beginning no earlier than one year after
a covered interstate branch is acquired
or established, the Board will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host state loan-to-deposit
ratio.
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By order of the Board of Governors of the
Federal Reserve System, March 30, 2001.
Robert deV. Frierson,
Associate Secretary of the Board.

Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the joint
preamble, the Board of Directors of the
Federal Deposit Insurance Corporation
proposes to amend part 369 of chapter
III of title 12 of the Code of Federal
Regulations to read as follows:
PART 369—PROHIBITION AGAINST
USE OF INTERSTATE BRANCHES
PRIMARILY FOR DEPOSIT
PRODUCTION
1. The authority citation for part 369
continues to read as follows:
Authority: 12 U.S.C. 1819 (Tenth) and
1835a.

2. In § 369.2, redesignate paragraphs
(f) and (g) as (g) and (h), respectively;
revise paragraphs (b), (c) and (d); and
add new paragraph (f) to read as
follows.
§ 369.2

Definitions.

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*
(b) Covered interstate branch means:
(1) Any branch of a state nonmember
bank, and any insured branch of a
foreign bank licensed by a state, that:
(i) Is established or acquired outside
the bank’s home state pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(ii) Could not have been established
or acquired outside of the bank’s home
state but for the establishment or
acquisition of a branch described in
paragraph (b)(1)(i) of this section; or

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Federal Register / Vol. 66, No. 68 / Monday, April 9, 2001 / Proposed Rules

(2) Any bank or branch of a bank
controlled by an out-of state bank
holding company.
(c) Home state means:
(1) With respect to a state bank, the
state that chartered the bank,
(2) With respect to a national bank,
the state in which the main office of the
bank is located;
(3) With respect to a bank holding
company, the state in which the total
deposits of all banking subsidiaries of
such company are the largest on the
later of:
(i) July 1, 1966; or
(ii) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining
whether a U.S. branch of a foreign bank
is a covered interstate branch, the home
State of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 211.22; and
(ii) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the State in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(A) July 1, 1966; or
(B) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.
(d) Host state means a state in which
a covered interstate branch is
established or acquired.
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(f) Out-of-State bank holding
company means, with respect to any
state, a bank holding company whose
home state is another state.
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3. In § 369.3, revise paragraph (a) to
read as follows:
§ 369.3

Loan-to-deposit ratio screen.

(a) Application of screen. Beginning
no earlier than one year after a covered
interstate branch is acquired or
established, the FDIC will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host State loan-to-deposit
ratio.
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By order of the Board of Directors.
Dated at Washington, D.C., this 26th day of
March, 2001.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 01–8642 Filed 4–6–01; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102